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This policy covers machinery breakdown arising from unforeseen and sudden physical loss or damage. It provides cover for plant machinery and mechanical equipment at work, at rest or during maintenance operations.
All types of machinery, plant, mechanical equipment and apparatus may be covered under Machinery insurance
If possible, all the machines of a plant or workshop or of a separate plant section should be included in the insurance in order to ensure that the risk is adequately balanced.
Only those items having a short service life compared to the entire plant are normally excluded from Machinery insurance, such as:
- All types of interchangeable tools
- Sieves, engraved cylinders, stamps, dies, ropes, chains, belts
- Parts made of glass, ceramic or wood, rubber tyres.
- Operations media of any kind such as fuel, gas refrigerants, catalysts, liquids, lubricants (oil in transformers and circuit breakers is, however, included since it is not only a coolant but also serves as an insulation agent)
By its very nature, Machinery insurance is all risks insurance for machinery, supplementing the coverage afforded by Fire insurance. Thus it covers unforeseen and sudden physical loss of or damage to the insured’s items, necessitating their repair or replacement. Loss or damage covered under Machinery insurance is mainly due to one of the following causes:
- Faulty design (calculations, plans, drawings and specifications), faults at workshop or in erection, defects in casting and material
- Faulty operation, lack of skill, negligence, malicious acts
- Tearing apart on account of centrifugal force.
- Physical explosion, fuel gas explosion in boilers
- Short-circuit and other electrical causes
- Shortage of water in boilers
- Storm, frost, drifting ice.
The individual exclusions from the cover mainly comprise loss or damage caused by:
- Fire, lightning, chemical explosions, burglary and theft, i.e. perils covered or coverable under other policies (loss or damage indirectly caused by lightning being included in the cover)
- Inundation, flood, earthquake, subsidence, landslide, impact of land borne, waterborne or airborne craft.
- Wear and tear as a consequence of ordinary use or operations as well as cavitation, erosion, corrosion (e.g. rust) or boiler scale (this exclusion relates, however, only to the parts immediately affected.)
- War or warlike operations, civil commotion of any kind as well as acts on the part of strikes and locked-out persons
- Willful acts or gross negligence on the part of the Insured or of his representatives.
- Faults or defects existing at the time of commencement of the insurance which ought to have been or were known to the Insured.
- Faults or defects for which the supplier is responsible either by law or under contract (losses covered by warranty)
- Nuclear reaction, nuclear radiation or radioactive contamination
The sum insured should always be the replacement value of the insured machinery (value of the new item plus customs duties plus transportation and installation charges).
The premium rates charges are calculated separately for each type of machine on the basis of statistics kept over a period of many years.
In the event of damage which may be repaired, the Insurers will indemnify the Insured in respect of the expenses to be incurred for restoring the damaged machinery to its working condition prior to the damage. These expenses mainly include the costs for repair work and the necessary spares, disassembly and reassembly costs, ordinary freight charges, customs duties, expenses for the employment of specialists and other charges contained in the sum insured.